FinalReportUSEPAAgreementXA 83397101

Final Report
Project
Activities that advance methane recovery and use as a

clean energy source in the oil and gas industry of
Ecuador
EPA Agreement #XA-83397101
Prepared by
Jorge Duque-Rivera, MSc Mech. Eng., Project PI

Mechanical Engineering Program
Faculty of Mechanical and Production Sciences Engineering
Escuela Superior Politcnica del Litoral
With the collaboration of:
Andrea Boero V., MSc Energy Conversion and Management

Alfredo Barriga R., PhD, Scientific Adviser
Gonzalo Zabala O., MSc Mech Eng., Gas Systems Design
Gustavo Guerrero M., MSc Mech Eng., Economic Analysis
Luis Albn Granizo, MSc Petroleum Engineering, Co-PI
Roberto Silva Zea, Petroleum Engineer, Legal Framework and Gas Systems Design
Ronald Ruiz, Petroleum Engineer, Field Work
Ivan Apolo, GIS
Angel Ramrez Mosquera, PhD, Environmental Adviser
Jos Carlozama, Industrial Engineer, Field Work
Roberto Saenz O., Sociologist/Demographer
Guayaquil, March 31st, 2013
Version March, 2013. Project XA-83397101, Project USEPA-ESPOL. Page 1

Final Report
Project Activities that advance methane recovery and use as a clean energy source in the oil and gas
industry of Ecuador
EPA Agreement #XA-83397101
Contents
1 Introduction ........................................................................................................................ 6
1.1 Background ................................................................................................................. 6
1.2 Project Objectives ....................................................................................................... 6
1.3 Project Outcomes ........................................................................................................ 7
2 Description of Ancon Oil Field .......................................................................................... 8
3 Legal and Environmental Framework .............................................................................. 10
3.1 Political Constitution of the Republic ....................................................................... 10
3.2 Hydrocarbon regulations ........................................................................................... 11
3.3 Environmental Law ................................................................................................... 12
3.3.1 Institutional Framework .................................................................................... 14
4 Oil and Gas Situation in Ecuador ..................................................................................... 15
4.1 Oil Exploitation in Ecuador....................................................................................... 15
4.2 The International Market Natural Gas ...................................................................... 16
4.3 Production of Associated Gas and Fugitive Natural Gas Emissions in Ecuador ...... 16
5 Oil Well Identification Process......................................................................................... 17
5.1 Description of the Area ............................................................................................. 17
5.2 Wells Characteristics and Production ....................................................................... 17
6 Equipment Selection and Testing ..................................................................................... 19
6.1 Equipment Selection ................................................................................................. 19
6.1.1 Hi Flow Sampler ................................................................................................. 19
6.1.2 Remote Methane Leak Detector Intrinsically Safe Model................................. 20
6.2 Testing Procedure ...................................................................................................... 20
6.2.1 Selection of the Testing Sample......................................................................... 21
6.2.2 Testing Activities ................................................................................................ 21
7 Testing Results ................................................................................................................. 22
7.1 Results ....................................................................................................................... 22
7.2 Conclusions ............................................................................................................... 24
8 Training ............................................................................................................................ 26
8.1 Training on the use of Hi-Flow Sampler ................................................................... 26
8.2 Training on the Use of the FLIR Camera .................................................................. 27
8.3 Training and Dissemination of the Project ................................................................ 28

9 Definite Field Location Selection ..................................................................................... 29
9.1 Mapping System ........................................................................................................ 29
10 Socio-economic Aspects of Neighbouring Towns ....................................................... 31
10.1 Political and Administrative Division of Santa Elena ............................................... 31
10.2 Demographic and Social Aspects in San Raymundo ................................................ 31
10.2.1 Population Growth in La Libertad ...................................................................... 31
10.2.2 Cultural Historical Context ................................................................................. 32
10.2.3 Geographical Location of San Raymundo .......................................................... 32
10.2.4 San Raymundo Population ................................................................................. 33
10.3 Field Research to Economic Establishments ............................................................ 34
10.3.1 Area of Research ................................................................................................ 34
10.3.2 Objetives of the investigation ............................................................................ 35
10.3.3 Investigation Units ............................................................................................. 35
10.3.4 Research Universe ............................................................................................. 35
10.3.5 Research Instrument.......................................................................................... 35
10.3.6 Main Results....................................................................................................... 35
10.3.7 Conclusions ........................................................................................................ 38
11 Gas Recovery Applications: Case for Gas Distribution in Neighbourhoods ................ 39
11.1 Collection and Treatment System of Natural Gas ..................................................... 39
11.1.1 Case A ................................................................................................................. 39
11.1.2 Case B ................................................................................................................. 40
11.1.3 Case C ................................................................................................................. 42
11.2 Design of Natural Gas Supply System for Domestic Use......................................... 43
11.2.1 Consumption Requirements .............................................................................. 43
11.2.2 System for the Utilization of Fugitive Natural Gas: Storage and Distribution
(Case B) 43
11.2.3 Advantages of the Proposed System ................................................................. 45
11.3 Pipeline System ......................................................................................................... 46
11.3.1 Guidelines .......................................................................................................... 46
11.3.2 Materials Used in Arteries Lines and in the Rings ............................................. 46
11.3.3 Dimensioning of pipes ....................................................................................... 47
11.3.4 Calculation of Pipes Diameter and Gas Velocity................................................ 47
11.3.5 Additional Considerations.................................................................................. 47

11.3.6 Connection Costs ............................................................................................... 48
12 Economic comparison of the different alternatives ...................................................... 49
12.1 Introductory Notes..................................................................................................... 49
12.2 Investment Necessary for Each Project ..................................................................... 50
12.3 Projects Turnover and Government Subsidy Savings ............................................... 51
12.4 Emission Reductions ................................................................................................. 51
12.5 Turnover of the Three Options Analysed .................................................................. 52
12.6 Cash Flows and Financial Evaluation of Each Scenario ........................................... 52
13 Conclusions ................................................................................................................... 54
13.1 Conclusions ............................................................................................................... 54
13.2 Recommendations ..................................................................................................... 55
14 Bibliography ................................................................................................................. 56

List of Annexes
Annex of Chapter 3: Ecuadorian Laws concerning Environmental Protection
Annex of Chapter 7: Fugitive Methane Monitoring Results

7.1. Monitoring Results of Wells
7.2. Monitoring Results of Tanks
Annex of Chapter 9: Mapping System

9.1. Layers structure description
9.2. Maps
Annex of Chapter 10: Socio-Economic Aspects of Neighbouring Towns

10.1. Demographic and Social Aspects in San Raymundo
10.2. Survey Form
10.3. Maps of economic establishments, years 2010 and 2012.
Annex of Chapter 11: Gas Recovery Applications

11.1. Natural Gas Compressors
11.2. Maps of Distribution of Wells
11.3. Design of Supply System of Natural Gas for Domestic Use
11.4. Maps of Distribution of Wells and pipelines
11.5. Calculation of Pipe Diameters and Gas Velocity
11.6. Description of Pipe Network Components
11.7. Safety Recommendations
11.8. Calculation of the Flow Rates and Pressure Drops in the Natural Gas
Distribution System by the Hardy Cross Method
Annex of Chapter 12: Economic Analysis of Alternatives

12.1. Investment and Revenue for Option 1
12.4. Cash flow for Option 1
12.7. Plugging Abandoned or Suspended Wells

1 INTRODUCTION
1.1 Background
The purpose of this project is to perform an inventory, measurements and a pre-feasibility
study for the recovery and utilization of part of the methane produced as a by-product of oil
production activities at the Ancn Oil Field, managed under concession contract with the
state by the Escuela Superior Politcnica del Litoral-ESPOL (Polytechnic University of the
Litoral) of Guayaquil, Ecuador, at the time of conception and approval of the project. For the
management of the activities in the oil-field, ESPOL had a contract with PACIFPETROL,
which conducted the operations in the field under the supervision of the so called Ancon
Project office at ESPOL 1.
The study includes an analysis of the technological options for gas recovery and use as well
as the barriers, legal, technical or otherwise, which need to be overcome for the recovery and
use of associated gas coming from a part of the field. It also includes a training workshop in
methane recovery and use in the oil and gas sector for stakeholders. The results and
experience gained with the project could be later extrapolated to the whole industry in the
country through dissemination activities.
The Ancon oil field is located in the southwest of Ecuador, approximately 145 Km west of
Guayaquil, in the Province of Santa Elena. Petroleum production began in the early 1920s.
Ancon is a marginal field with a current total of 1400 oil producing wells with an average
production of 1 barrel/day of oil per well.
The Ancon field is divided by areas: Perito, La Fuente, Certeza, Emporio, Santo Toms, San
Joaqun, La fe, Tablazo, Cacique, Central, Ancn, Seca, Hecotea and Concepcin. The areas
called Navarra and Asturias, to the west of the field, are gas producing fields. The concession
area includes the fields of San Raymundo, Santa Paula, Cautivo, Carmela, and El Tambo.
The total area of the field is around 1200 km2.
As stated in the concession contract, ESPOL uses part of the revenues from the extraction of
the Oil Camp for university extension and social projects for local communities in the region
of Santa Elena and also to support local Municipalities in the area. The project is fully in line
with the spirit of the Concession contract: research, technology acquisition and technology
transfer for the benefit to the surrounding community and the country at large.
1.2 Project Objectives
The goal of the project partnership is to improve the likelihood of success of methane
recovery and use projects from the oil and gas industry in Ecuador, by reducing barriers to
such project development through a pilot study, capacity building, and systematization of
lessons learned from the project, and dissemination activities.
1
The concession contract with ESPOL was terminated by the government in Dec 2010, but the reversion is still
in the process of being completed. The government decided to retain PACIFPETROL as operator but without
the participation of ESPOL. This situation caused difficulties that led to delays in the completion of the
activities of the present project.

To achieve this goal, the specific objectives of this project, were stated as follows:
(1) To conduct an inventory and measurements to determine the quantity and quality of
the gas being currently vented at the Ancon oilfield,
(2) To develop a GIS based decision support system to assist in the selection of recovery
and use options,
(3) To identify schemes to maximize gas recovery,
(4) To identify legal barriers for the implementation of gas capture and use in Ecuador.
(5) To complete a pre-feasibility analysis for the use of the recovered methane, and
(6) Conduct training in Ecuador.
1.3 Project Outcomes
The present report summarizes the main results obtained during the project. As the main
outcome this final report explores the pre-feasibility of economically collecting the gas and
converting it into an energy product, as well as serving as a template for projects in Ecuador.
For this, a GIS based system has been developed to assist in the selection of recovery and use
options; and the legal barriers for the implementation of gas capture and use in Ecuador were
identified. Potential greenhouse gas emission reductions have been quantified and carbon
finance has been also explored.
Training activities were conducted as part of the project and one final training workshop was
delivered in Guayaquil, the main ESPOL campus, and the related activities are briefly
presented in this report. As part of the dissemination activities for the project, an extended
abstract has been submitted for participation to the 11th Latin American and Caribbean
Consortium of Engineering Institutions LACCEI- Conference to be held in Cancun in
August 2013.

2 DESCRIPTION OF ANCON OIL FIELD
The "Ing. Gustavo Galindo oilfield, commonly known as Ancon Field, is located 145 km
west of the city of Guayaquil along the coastline of the Santa Elena Peninsula of Ecuador.
The whole oil deposit has an area of about 1200 km, 40% of which is offshore. Oil
production from the Ancon Field is associated with formations between 1000 and 5000 feet.
About 2800 wells have been drilled; most of these wells are of the tertiary period. The fields
daily production is around 1350 barrels of crude oil per day.
Figure 2.1. Location of Ancon Oilfield
Stratigraphy
In the Tertiary sequence crossed in the Peninsula presents various reservoirs, the most
important being the Atlanta Sandstones, equivalent in the subsoil to the Ancons Azcar
formation. In the following Cretaceous sequence, in order of importance based on their
production, the sand levels are: the formations Passage Beds, Clay Pebble Beds (CPB), and
Socorro.
Reservoirs Characteristics
The evolution of the gas-oil ratio over the life of the wells drilled in Atlanta suggests a
production mechanism by expansion of dissolved gas. Although there is no sure estimate of
the gas that is being produced, it is mentioned in the Ancon Espol Operational reports that
gas-oil ratio rapidly increased by putting the wells into production, stabilizing at a high GOR
in mature development areas (1350 ft3/bbl), to decline in old wells or depleted areas.
The average temperature at the reservoirs is 50C (120 F) with an estimated gradient of
2.4 C per 100 meters (corrected).

The information included in the aforementioned reports shows a wide dispersion, with the
estimated initial reservoir pressure being around 1400 to 1850 psi, depending on the work
area and the structural position of the reservoirs.

3 LEGAL AND ENVIRONMENTAL FRAMEWORK
In this section of the report, the legal and environmental framework that regulates the
hydrocarbon sector in Ecuador is analysed, with emphasis on the identification of the
obstacles to implement the natural gas business in the country as a whole, and also of those
that would hamper the recovery and use of vented and/or fugitive gas from the Ancon
oilfield. Also, the analysis will deal with the current regulations regarding reporting and
management of sources of methane emissions in general and in the hydrocarbon sector in
particular.
The applicable legislation to the hydrocarbon sector in Ecuador has four components, which
can be grouped as follows:
I. Political Constitution of the Republic

II. Hydrocarbons Law and Bylaws, Oil Transfer Contract Regulations, Accounting and
Control Regulation and Supervision of contracts for provision of services for the
Exploration and Exploitation of Hydrocarbons (This regulation does not exist yet,
there is an older one that has not been updated).
III. Environmental Management Act, Substitute Regulation of Environmental Regulations
for Hydrocarbon Operations in Ecuador
IV. Tax laws and regulations to hydrocarbon activities. Ministerial Agreements.
3.1 Political Constitution of the Republic

Article 1 of the Constitution states that non-renewable natural resources, including
hydrocarbons (oil, natural gas, asphalt and other hydrocarbon forms or methane generation
sources such as coal), are the property of the Ecuadorian State. It can be argued that this
potentially represents the main obstacle to the natural gas business because its development
depends on whether or not the State decides to promote these non-renewable resources.
Without this decision, which is a political decision, there cannot be this type on industry in
the country.
Article 7 of the Constitution stipulates that the exploitation of non-renewable resources can
only be conducted after consultation with the communities living in areas near the resource
site. The results of the consultation, however, are not binding and when the community does
not approve a particular project, the President of the country may still give approval to the
project, if it is considered in the best interest of the country.
Article 261 states that the State is not just owner of the resources but also has control and
management of hydrocarbons. In case of disputes between the contractor and the State, the
parties have the right to resolve the conflict in court or by means of an agreed upon
competent body.
Article 274 allows the decentralized autonomous governments (DAG) to also get involved in
the regulation of companies with projects of industrialization or exploitation of non-
renewable natural resources, including the exploitation of natural gas fields, in their territorial
jurisdictions.

Articles 300 and 301 consider tax issues relating to the business of exploitation of non-
renewable resources. In particular, the main obstacle denoted here is that once a tax burden
has been introduced in the strict sense of the legal regulatory framework, it cannot be revoked
by executive decree, but will require resort to a more complex mechanism, the National
Assembly. An example of this is the surcharges on the exploitation of non-renewable natural
resources or on the use of natural resource in an oil/gas concession.
Articles 315 and 316 indicate that the first degree competence for the exploitation of non-
renewable natural resources belongs to the state. As it is shown below in the amended
Hydrocarbons Law, private enterprises can only in rare occasions have access to the
exploitation of hydrocarbon deposits.
3.2 Hydrocarbon regulations

In the Reform of the Hydrocarbon Law (Supreme Decree No. 2967), Article 2 (Amended by
Articles. 1, 18, 19 and 22 of unnumbered Decree Law, RO 244-S, July 27, 2010) specifies all
the parameters to which the contracts for oil exploration and exploitation of hydrocarbon
reserves are subjected to. The regulation only covers the issue of marginal fields for oil
production without any mention to natural gas production; it is then up to the authorities to
issue a declaration of a marginal field for exploration or exploitation of gas reservoirs. This is
considered to be the main obstacle when implementing a project for this resource.
Meanwhile, Article 13 (amended by Article 18 of the unnumbered Decree Law, RO 244-S,

July 27, 2010) states that the investments in partnership contracts are at the risk of the
company interested in the exploitation of resources. This could represent a barrier unless the
areas for exploitation are of low risk.
Under Article 23 (Replaced by Article 9 of Act 44, RO 326, Nov. 29, 1993, and amended by
Article 18 of the unnumbered Decree Law, RO 244-S, July 27, 2010), the obstacle is that
being a novel market, the natural gas market does not have national development plan or
expansion plans as a substitute for liquefied petroleum gas (LPG), so that state policies
should be focused on establishing the final retail cost and the respective regulatory
framework for commercialization. At this level it is left at the risk of the operator obtaining
resources for the development and expansion of distribution and marketing plans of the gas
without the respective support and promotion of the state laws. At the time of writing this
report, prices have been set for the natural gas coming from the Amistad Field, for domestic,
commercial and industrial use. (Executive Decree 1458, reforming article 11 of the Executive
Decree 929, RO 575, Nov 14, 2011, March 13, 2013)
The provisions of Article 34 (amended by Article 19 of unnumbered Decree Law, RO 244-S,

July 27, 2010) prohibit the industrialization and commercialization of natural gas associated
with oil fields exploitation. However, Article 35 opens the alternative to industrialize and
commercialize natural gas from an oil field by the company, as opposed to the previous
article. In this regard, Article 36 does not give the possibility for sale of the associated gas
from an oilfield in operation, but orders the free provision of the natural gas to the state oil
company without any compensation.
The Hydrocarbon Law still in effect, sets the standards for the exploration and exploitation of
crude oil and natural gas. However, it does not take into account the associated natural gas
from the exploitation of crude oil deposits. In the Ministerial Agreement (MA) 389, which is

the Hydrocarbon Operations Regulations, Article 11, sets the parameters for the use of gas by
contractors who exploit oil deposits.
This last article was amended by Ministerial Agreement 017, published in Official Gazette
(RO) 288 of 2004, as neither the Hydrocarbon Law nor the Ministerial Agreement (MA) 389
(originally) considers the potential sources of natural gas, such as associated gas from oil
production or dry natural gas fields, and fields of natural gas and condensate.
MA 389, Article 14 provides guidelines for proceeding to operate a natural gas field after the
exploration period.
For the case of plugging and abandoning wells in Article 24 from the same Regulation there
are parameters for this task. This is very important because it specifies the obligation of the
contractor to mend operational or economic problems from a well, be it oil or gas.
In the second transitional provision of the Regulation of Hydrocarbon Operations (RHO), the
State requires contractors to have measurements and treatment of the associated natural gas
from the exploitation of oil fields.
In general then, the RHO specifies certain aspects that are unclear with the Hydrocarbons
Law, specifically regarding the exploitation of natural gas associated with oil and gas
deposits, surplus gas and condensate. Also, the State through this regulation requires
contractors to extract the rich components (high value gases such as propane and butane) of
associated gas and sell it to the state oil company Petroecuador or to burn it in exceptional
cases prior the payment of a compensatory fee.
In summary, the State owns all hydrocarbon deposits. The State reserves for itself the right
for the exploitation of hydrocarbons alone or associated with domestic and foreign companies
with proven experience. PETROECUADOR is responsible for the production, processing and
transportation of oil, alone or in partnership with other companies, and that serves the
interests of the State. The regulator and supervisor of the exploration, production,
transportation and marketing of hydrocarbons is the National Board of Hydrocarbons (under
Article 11 of the HL), which is under the Ministry of Non-Renewable Natural Resources.
3.3 Environmental Law

The Environmental Management Act states that (Article 8): "the National Environmental
Authority is exercised by the Ministry of Environment, guiding agency that coordinates and
regulates the decentralized National Environmental System, without prejudice of the
responsibilities in the areas of their competence and according to the laws that govern them,
exercise other state institutions."
Article 86 of the current Constitution of the Republic, mandates that the State promotes the
right of the population to live in a healthy environment. Also, Article 89, paragraph 1, states
that the State shall promote the use of environmentally clean technologies and clean energy
alternatives.
Environment Regulation establishes the rules in the exploration, production, processing and
transportation of hydrocarbons. In Article 30, subparagraphs a and b provide the tools to
monitor the emissions in hydrocarbon operations and oil storage tanks, respectively.

In Article 57, literals f.1, f.2 and f.3 establish the management and control of gaseous
emissions to the atmosphere, the combustion of natural gas and the special handling of
natural gas and poor natural gas according to the Hydrocarbons Law.
The Environmental Management Law sets out the principles and guidelines of environmental
policy, determines obligations, responsibilities, levels of participation from the public and
private sectors in the environmental management and indicates the permissible limits,
controls and sanctions in this matter (Article 1). Article 20 sets the obligation to obtain the
corresponding environmental license in advance to start any activity that could endanger the
environment.
The Hydrocarbons Law regulates the exploration and production, refining, transportation,
storage and marketing of hydrocarbons in Ecuador. In Article 31, Literal t) indicates that
"PETROECUADOR and contractors or partners in exploration and exploitation of
hydrocarbons, in refining, marketing and transportation, are required, as they are concerned,
to conduct petroleum operations in accordance with the laws and regulations to protect the
environment and security of the country and in relation to the international practice of
preservation of ichthyologic wealth and agricultural industry.
The Health Law seeks to regulate the actions that can affect the universal right to health given
in the Constitution of the Republic and the law. In its Article 95 states that "the national
health authority in coordination with the Ministry of Environment, establish the basic
standards for the preservation of the environment in areas related to human health, which are
mandatory for all individuals, public, private and community. "
The Environmental Regulations for Hydrocarbon Operations in Ecuador, in Article 1 states

that its purpose is to regulate oil and gas exploration activities geophysics, drilling,
development and production, storage, transport, industrialization and commercialization of
crude oil, petroleum products, natural gas, subject to produce impacts on the environment and
the social organization and economic populations living in their area of influence throughout
the country.
In Articles 9, 14, 25, 46, 50, this regulation establishes that PETROECUADOR, its affiliates
and contractors shall submit Environmental Impact Assessments (EIA) for the different
phases of the project, including geophysical prospecting, drilling exploratory and advanced
storage - transport - industrialization and commercialization, and construction of civil works.
The Environmental Regulations for Hydrocarbon Operations in Ecuador establishes

guidelines to be followed by the control subjects regarding: implementation, civil works,
chemical management, industrializing facilities, security and industrial hygiene, operation
and maintenance of equipment and facilities, noise limits, management and treatment of air
emissions, management and treatment of discharges and waste.
Article 82 of the Organic Law of Citizen Participation states that "any decision or
government approval that may affect the environment must be consulted with the community.
The consulting entity will be the State. "
In Annex 3.1 there is a summary of the Ecuadorian laws concerning environmental protection
activities and hydrocarbon operations in Ecuador.

3.3.1 Institutional Framework
The regulatory framework for environmental protection is stated in the Environmental
Management Law, and it determines that the Ministry of Environment is the National
Environmental Authority and states that "it acts as a guiding body, coordinator and regulator
of the National Decentralized Environmental Management.
Besides environmental competences, there are other competences that are derived from the
location of the project, as well as the functional areas to which the project belongs, in this
case hydrocarbons.
3.3.1.1 Institutions with Territorial Competences

The local jurisdiction is that which is exercised in a given geographical area. The areas of
political and territorial competence are established in the Constitution and special laws, these
being the following:
Autonomous regional governments

Provincial governments
Municipal governments
Rural parish governments
3.3.1.2 Institutions with Functional Administrative Influence and Competences

Functional competences are those which lie in a particular socio-economic activity;
regardless of the geographical area in where takes place. Entities that have such powers, can
act in any geographic area on which there is territorial jurisdiction of any public agency. This,
however, does not mean a contradiction, since both types of competences are completely
defined.
Public agencies with jurisdiction or functional responsibilities are those to which a law or
executive action has assigned administrative control or regulation relating to a socio-
economic activity or specific utility.

4 OIL AND GAS SITUATION IN ECUADOR
4.1 Oil Exploitation in Ecuador
Oil exploitation is divided into 33 blocks in operation, 7 of which are located on the Coast
and the rest in the Amazon region. Fourteen blocks are operated by private companies 2, while
the remaining are operated by the state oil company PETROECUADOR and its subsidiaries
or by PETROAMAZONAS.
Fig. 4.1. Oil Map of Ecuador

Source: Secretary of Hidrocarbons, 2012.
As mentioned earlier, the industry sees an evolution in terms of the application of

environmental standards after the promulgation of the Environmental Regulation for
Hydrocarbon Operations. In the coastal region there are currently about 3 000 wells. The
eastern provinces with the highest number of wells are Sucumbios and Orellana, while the
2
Within private companies can be noted that in 2004 the ones that operated in Ecuador were: AECE, AGIP,
BURLINGTON, CANADA LARGE, CGC, CNPC, EDC, CITY, ESPOL-Pacifpetrol, WEST (now
Petroamazonas), Perenco (today held by Petroamazonas), Petrobras, Repsol YPF and Tripetrol. From 2006 to
2008, several oil blocks operating private companies have been reverted to the State. In 2008 all oil contracts
were renegotiated by order of the Ecuadorian Government. Source: Country Environmental Analysis.October
2008, IDB.

cantons that keep the largest number of wells are Orellana, Lago Agrio, Joya de los Sachas
and Shushufindi. Furthermore, it should be noted that four refineries operate in Ecuador:
Esmeraldas (the largest), Shushufindi, Amazon and La Libertad.
The crude oil is transported through two pipelines, the SOTE and OCP, of 500 km length
each, from Lago Agrio to Balao. The SOTE is operated by PETROECUADOR while the
OCP are operated by private oil companies. On their journey, the two lines cross three of the
four regions of Ecuador.
3
4.2 The International Market Natural Gas
In recent years the natural gas market worldwide has been characterized by greater use of this
natural resource as fuel for electric power plants, as a result of the ecological and economic
benefits it offers over other fuels. Natural gas has become a "commodity" as a result of
technological progress and affordable costs of Liquefied Natural Gas (LNG). According to
British Petroleum (2007), in 2006 the world economy grew by 5.4% versus the previous year,
and the consumption of energy (oil, coal, natural gas, hydropower, nuclear energy) increased
2.4% over 2005. In 2006, global consumption of natural gas was 275.826 million cubic feet
per day (MMCFD) or 284 377 billion BTU per day (1 cubic foot of natural gas = 1.031 Btu =
0.028317 meters cubic of natural gas = 0.259671 calories), 2.5% higher than in 2005 and
27.2% higher consumption than a decade ago. Interestingly, the regions of highest
consumption of natural gas in the world are in Europe-Eurasia, North America and Asia
Pacific, which together account for 82.6% of global demand. It is worth mentioning that in
2007, United States (U.S.) consumed about 23 trillion (1 trillion = 1,000,000,000,000) cubic
feet of natural gas.
4.3 Production of Associated Gas and Fugitive Natural Gas Emissions in Ecuador
In Ecuador, the oil industry is the largest user of associated gas generated in its operations,
with diverse applications as: power generation, improved recovery and thermal heaters. In the
Amazon is located the highest concentration of oil blocks, and there is also in this region
where the main users of associated natural gas are situated.
Updated statistics on the use, flaring and venting of natural gas in the country are not
available. However, data are provided by the former Ministry of Energy and Mines in 2006,
where it was estimated that in Ecuador the production of associated natural gas is 127 163
MCFD, of which 64480 MCFD is used and 62683 MCFD is burned.
According to that report, the Gustavo Galindo Velasco ESPOL, commonly known as Ancon
field, produced 656.84 MCFD, which were completely consumed on site.
3
Evaluation of Natural Gas Options in the Energy Industry, PhD Thesis. Victor Manuel Garcia de la Vega.
Instituto Tecnolgico y de Estudios Superiores de Monterrey (ITESM), Mexico City. Mexico. July 2009.

5 OIL WELL IDENTIFICATION PROCESS
5.1 Description of the Area
The Gustavo Galindo Velasco oil field, commonly known as Ancon field, presents a
particular situation in comparison with other oil fields worldwide. The deposits in Santa
Elena are very atypical; consequently it cannot be compared in efficiency and production
with any other oil field. There are several factors that determine the amount of oil that can be
extracted, and a significant one is the geologic condition of the structures where the
associated gas (or free gas) is. In the case of the Ancon field these structures have many
failures and low energy, which prevent a continuous/homogenous emanation of gas.
The Ancon oil field can be divided in four sectors: the first includes the stations Seca Cental,
Cacique, Emporio and Certeza; at North are Prosperidad, Navarra and Matilde; Santa Paula,
San Raymundo, Las Conchas, Petropolis are located in Salinas; and the main station in La
Libertad is Cautiverio. The abovementioned stations were primarily considered when
selecting the monitoring sample, as is described in the next section.
The geologic formations in each of these zones are very similar. The formations Socorro and
Atlanta are present in these areas but at different depths.
From these zones it is known that in Transnavarra and Santa Paula there is natural gas,
nevertheless it has not been determined which is richer in methane. Santa Paula is a zone
more studied, where is estimated that there is 93% - 97% of methane. In other zones this
value is much lower.
Because of the many geologic failures present in this region, there is no continuity in the
geologic formations, which does not allow knowing beforehand the flow unit. Indeed, it is
possible that there is a flow unit per failure, each with different petro-physical characteristics
(porosity, water saturation, permeability). Thus, the amount of gas and the methane
concentration vary in each flow unit.
5.2 Wells Characteristics and Production

Because of the characteristics mentioned above, the production of associated gas from the
wells in the Ancon field is irregular and relatively low (< 1000 ft3 per day is estimated for the
total of wells, meanwhile the emissions of one well could be in the range of 5 to 80 ft3/day).
These very low emissions also make it difficult to undertake gas emissions monitoring in this
oil field.
Another aspect to consider in a well is that its production varies not only spatially but also
with time. For instance, a region that is currently rich in methane (as Santa Paula) could
reduce its production rate in some years, whereas the opposite could occur in a zone with
currently no significant emissions (as the south region of the Ancon oil field).
All the wells are vertical, with depths ranging between 3500 to 45000 ft, in formations
Atlanta and Socorro. In other formations, the depth of the well varies between 800 and 900 ft.
In addition, there are a significant number of wells that are not separated from each other,
because at the time they were drilled, there was no such requirement. Because of that, and the

multiple failures that are in the region, when oil or gas is extracted from one of these wells is
not possible to know with certainty from which formation is. This has implications on the
production of the wells and the whole field.
This project also includes measurements of fugitive gas from oil storage tanks. In these tanks
is stored the oil extracted from wells with mechanic pumping system. In addition of oil, these
tanks also contain gas and water from the extraction; and, a natural separation takes place,
where the gas is accumulated at the top of the tank, and is then vented to the atmosphere.
Leakage pressures are very low (1 2 psi), thus to use this gas in nearby communities, it
must be compressed before reaching the points of use.
The following figure shows some of the abandoned wells located in Ancon.
(1) (2)
(3) (4)
Fig. 5.1. Wells ANC0986 (1), ANC0988 (2), ANC0265 (3), NCDD01 (4) at the Ancon oil
field

6 EQUIPMENT SELECTION AND TESTING
6.1 Equipment Selection
There are different methodologies for inspection and leak detection in production systems of
an oil field, but in the case of the Ancon field for its long productive life, it is necessary to
choose the best methods of detection and quantification of the leakages.
There is no simple answer to which technology/method is the best for gas leak detection and
measure. Each technology has certain capabilities and limitations and thus the suitability of a
given method largely depends on the application in which it is to be used. Therefore, to
choose the correct method, one must properly define application requirements.
For portable natural gas leak detection, flame ionization (FID) and catalytic combustion (CC)
detection methods have served the oil and gas industry over the last twenty (20) years.
Pellistor sensors in the catalytic combustion method and flame ionization detectors in the
flame ionization method operate with gas concentrations on the ppm scale as well as on the
%LEL scale. The thermal conductivity method is typically employed to measure high
concentrations of gases in the % volume range. Technologies such as solid state (or semi-
conductor) and infrared (IR) cover the full gas concentration range of ppm, %LEL and %
volume gas concentrations. However, both, solid state as well as infrared methods suffer from
major limitations for gas detection such as high cross-responses to the other gases found
within the composition of natural gas (over-reading up to 60%) and, in some cases, cannot be
used to detect gases in all concentration ranges.
Remote sensing technologies have been developed, and successfully used in detecting
pollutants. These technologies include: Thermal imaging and Tunable Diode Laser
Absorption Spectroscopy (TDLAS).
A description of the selected equipment and their operation is presented as follows.
6.1.1 Hi Flow Sampler 4

The Hi Flow Sampler is a portable, intrinsically safe, battery-powered instrument designed to
determine the rate of gas leakage around various pipe fittings, valve packings, and
compressor seals found in natural gas transmission, storage, and compressor facilities. This is
accomplished by sampling at a large flow rate (between 5 and 10.5 cfm) to completely
capture all the gas leaking from the component along with a certain amount of air. By
accurately measuring the flow rate of the sampling stream and the natural gas concentration
within that stream, the gas leak rate can be calculated using the following equation:
Leak Rate = Flow Rate (Leak CH4 Level Background CH4 Level)
To ensure that the instrument is capturing all the gas that is escaping, testing is performed at
two flow rates. The first measurement is taken at the highest possible flow rate, followed by a
second measurement at a flow rate that is approximately 75% of the first. If the two
calculated leak rates are the same, then it can be assumed that all gas has been captured
during the test.
4
Heath Consultants Incorporated, May 2010.

The main unit consists of an intrinsically safe, high-flow blower that pulls air from around the
component being tested, through a flexible hose and into a manifold located inside the unit.
The sample passes through a venturi restrictor where the measured pressure differential is
used to calculate the samples actual flow rate. Next, a portion of the sample is drawn from
the manifold and directed to a methane sensor that measures the samples methane
concentration in the range of 0.05 to 100% gas by volume. A second identical methane sensor
channel measures the background methane level within the vicinity of the leaking
component. The final element in the sampling system is a pump that exhausts the gas sample
back into the atmosphere away from the sampling area.
The measured flow rate and the measured methane levels (both leak and background levels)
are used to calculate the leak rate of the component being tested, with all measured and
calculated values being displayed on the hand-held control unit.
6.1.2 Remote Methane Leak Detector Intrinsically Safe Model 5

The Remote Methane Leak Detector can quickly and efficiently detect leaks up to one
hundred feet away. Using laser technology, remote detection allows the user to safely survey
areas that may be difficult to reach. The RMLD consists of two interactive components: a
transceiver subsystem and a signal processing/user interface controller. The Transceiver has
two lasers; an infrared laser beam that is non-visible and is continuously on while the unit is
turned on. The green spotter laser is similar to those used for presentation pointers and is
turned on by the operator by depressing the trigger button. The RMLD uses laser technology
known as Tunable Diode Laser Absorption Spectroscopy. When the laser passes through a
gas plume, the methane absorbs a portion of the light, which the RMLD then detects.
6.2 Testing Procedure

In the Ancon Oil Field there are approximately 2800 wells, of which 1000 to 1500 wells are
abandoned or suspended from operation (depending on the season). The latter group has been
the main focus of this project, in order to minimize fugitive GHG emissions from these
installations. Field work has focused on two specific units:
i. Wells
ii. Storage tanks
Excluding the following units:
Pump house
Santa Paula Station
Compressor Station 67
Compressor Station Tigre
Dehydration and Natural Gas Extraction Plant
The abovementioned units were recently refurbished (late 2008), therefore there are no
leaking, which was verified on field, having no pressure variation in the lines and in each of
the component subunits.
5
Heath Consultants Incorporated, May 2010.

6.2.1 Selection of the Testing Sample
The conditions described in the Section 5 are constraints when making estimations of the
quantity and quality of associated gas of the wells, based on single measurements. That is, the
result of the measurements of one well cannot be generalised to all the wells of that area.
Hence, selecting a representative monitoring sample of the total of abandoned wells is not
considered possible. Nevertheless a sample was taken based on other considerations such as:
Proximity of wells to inhabited areas.

Distance between oil wells and access roads.
Proximity to existing gas handling facilities.
Considering the above, 100 wells were selected from the zones listed in the previous section,
in particular near to the Santa Paula station. This production station has a two-phase separator
system and a compressor, where the associated gas from active wells is conducted. The gas is
then directed to a natural gasoline station in Ancon, through an 8 km gas pipeline. Santa
Paula station is located at 2 km from the community of San Raymundo. In addition 30
storage tanks were included in the monitoring. The weighted sample would allow knowing
the emissions of all 90 tanks.
6.2.2 Testing Activities

In order to determine the quantity and quality of the gas leaks from the wells and storage
tanks, the methodology recommended by the equipment manufacturer was followed. Using
the leak screening equipment, precautions were taken to prevent leakage of methane into the
air during measurement (see Fig 6.1).
Fig. 6.1. Monitoring of Wells and Storage tanks

7 TESTING RESULTS
7.1 Results
The monitoring of the fugitive emissions of natural gas from the 100 wells and 30 storage
tanks was performed using specialized equipment (leak screening equipment RMLD and the
Hi-Flow sampler). The results for the wells are presented in the following chart; and, in
Annex 7 are the detailed records of the results obtained for the wells and tanks.
The wells are classified in groups, in accordance to the linear distances between them (see
Section 11.1.1 and 11.1.2 of this report).
Table 7.1. Monitoring Results of Natural Gas Emissions

Geographic Location (UTM)
Methane emission
Id. Well Code
rate (ft3/min)
Longitude Latitude
SPA0077 115 508650 9750625
SPA0082 490 508474 9750654
Group 1
SPA0088 360 508516 9750457

SPA0203 216 508384 9750530
SPA0221 144 508239 9750521
SPA0225 115 508601 9750616
SPA0246 274 508696 9750221
ANC0381 115 520591 9742630
ANC0382 144 520650 9742781
Group 2
ANC0388 144 520544 9742459

ANC0394 144 520441 9742589
ANC0590 115 520740 9742754
ANC0318 144 521256 9742759
ANC0582 317 519844 9743509
ANC0424 446 520027 9743182
ANC0546 360 520946 9743382
Group 3
ANC0547 259 520728 9743545

ANC0548 360 520759 9743444
ANC0585 475 520057 9743452
ANC1703 317 520224 9743304
ANC1713 576 520265 9743108
CMA0021 288 516145 9750054
CMA0006 360 516382 9749741
Group 4
CMA0020 230 516291 9749554

CMA0024 432 516348 9749419
CMA0026 274 516441 9749539
CMA0038 259 516482 9748862
ANC0294 216 516701 9743477
Group
ANC0298 202 517044 9743217

5
ANC0334 187 516137 9742126

Methane emission
Id. Well Code
rate (ft3/min)
Longitude Latitude
ANC0340 187 517336 9742744
ANC0341 173 517293 9742833
ANC0307 144 520865 9742975
ANC0333 158 517071 9741784
ANC0284 72 518458 9741686
ANC0283 144 519483 9741511
ANC0308 158 519337 9741602
ANC0309 173 519396 9741767
ANC0265 72 518567 9742372
ANC0279 158 518728 9742369
ANC0273 144 520719 9742504
Group 6
ANC0270 158 521144 9742896

ANC0276 144 517949 9741627
ANC0278 187 518841 9741659
ANC0280 144 519488 9741787
ANC0550 144 518104 9740972
ANC1109 504 521437 9740049
ANC1117 317 520786 9739802
ANC1353 432 520970 9739875
ANC1360 576 520955 9739776
Group 7
ANC0986 490 521666 9739756

ANC0988 245 521594 9739930
ANC1076 461 521315 9739818
ANC1104 605 521128 9739748
ANC1132 288 521750 9739794
ANC0996 14 522816 9738807
ANC1007 14 522892 9738746
Group 8
ANC1040 288 522709 9738672

ANC1657 14 522913 9738586
ANC1986 29 522756 9738821
ANC2014 43 522550 9738601
ANC0439 432 521870 9744438
Group
ANC0440 317 521982 9744307

9
ANC0441 403 521814 9744275

ANCC025 518 513985 9743484
ANCC024 212 514139 9743334
Group 10
ANC0012 590 515958 9743329

ANC0015 576 515868 9743160
ANC0017 389 515922 9743008
ANC0026 446 515666 9743088
ANC0002 518 515044 9742862

Methane emission
Id. Well Code
rate (ft3/min)
Longitude Latitude
MOR0001X 346 526438 9759176
ANC1391 576 517232 9745145
ANC0799 0 513779 9743944
ANC0261 72 520455 9743531
ANC0319 14 521205 9742589
ANCDD01 562 516620 9741798
ANC0311 0 517351 9741371
ANC0283 187 519483 9741511
ANC1501 0 519701 9740689
ANC1650 0 519891 9740514
ANC0969 576 520655 9740404
ANC1692 403 520712 9740424
ANC1010 504 521300 9740739
No group
ANC1109 346 521437 9740049

ANC1677 634 521050 9740371
ANC1652 202 519271 9739739
ANC1373 547 520831 9739552
ANC0826 446 521893 9739569
ANC0952 576 521936 9739308
ANC0958 216 521984 9739602
ANC1102 547 521283 9739620
ANC0825 418 522043 9739444
ANC0933 648 522051 9739542
ANC0935 58 522119 9739377
ANC1014 72 522733 9738870
ANC1302 0 522958 9738579
ANCC042 86 522810 9738104
ANC1142 14 523338 9738264
ANC1143 0 523239 9738228
Source: Field work US EPA ESPOL Project, 2012.
7.2 Conclusions
The training conducted in Ancon oil field with Bacharach and RMLD equipment applied to
the determination of methane gas, established favourable conditions for their use in wells
(active, suspended from production and abandoned), flow lines, storage tanks, compressor
stations, production stations and other facilities.
The determination of methane gas with the Bacharach and RMLD equipment showed sound
results; even with variations of meteorological conditions (wind speed and relative humidity).
It was determined that the volume of fugitive gas from the wells sampled equals 27,065 SCF
per day , and 11,750 SCF per day of gas is leaking from the storage tanks.

From the wells sampled, the average methane emission rate is 270 ft3/day, with a standard
deviation of 190 ft3/day. This value indicates that the data points are spread out over a large
range of values, as can be seen in Fig. 7.1.
From the total, 6 wells registered cero methane emissions. On the other hand, the maximum
daily emission of methane registered was 648 SCF.
16
14
12
10
Number of Wells
8
6
4
2
0
Range of Methane Emissions (ft3/day)
Fig. 7.1. Distribution of Wells per Range of Methane Emissions
The following chart shows the daily methane emission by group of wells. Groups 3, 7 and 10
presented the highest values (3000 4000 ft3/day).
9000
8000
Methane emision rate (ft3/day)
7000
6000
5000
4000
3000
2000
1000
0
1 2 3 4 5 6 7 8 9 10 N/G
Groups
Fig. 7.2. Daily Rate of Emission of Methane into the Atmosphere from Monitored Wells

8 TRAINING
One of the main objectives of this project has been the implementation of training programs
and technology transfer to the different groups involved. In brief a description of two of the
training sessions conducted is presented as follows.
8.1 Training on the use of Hi-Flow Sampler

On February 17, 2011 was held a training session with the Hi-Flow sampler at the Ancon oil
field. The main goal of this visit was to have the equipment field ready for measurements,
and to familiarize the project's technical personnel with its use and applicability in actual
field work. In addition, some preliminary gas leaks measures on oil wells in the Ancon Field
were carried out.
Training on the use of Hi-Flow Sampler, consisted of the technical explanation of each of the
components, and equipment operation.
Fig. 8.1. Training on the use of Hi Flow Sampler
ESPOL Team and Ancon-ESPOL project engineers attended the training session. The staff
was instructed on the use of important accessories, the main connections of equipment,
checking the calibration, equipment operation, and interface management of the data logger.
Before actual field work, team members were subjected to induction for activities around oil
wells. Instructions included verification of anti- explosion characteristics of the equipment to
be used, avoidance of the use of spark generating equipment, including vehicles not fitted
with spark and flame deterrents in their exhaust systems, use of explosion meters, among
others related subjects.
As a field work, measurements of gas leaks were taken on oil wells Ancon 386 and Ancon
21. Ancon 21 is a well with a mechanical pumping extraction system. Measures were taken
on the oil well head, and on the engine exhaust.

Fig. 8.2. Gas leak measurements on oil wells Ancon 386 and Ancon 21
8.2 Training on the Use of the FLIR Camera

On January 2012 at the Esmeraldas State Refinery, ESPOL personnel participated in training
on the use of FLIR camera, GF-320 model. This training included field test in various sectors
in the area of distillation of oil products 6.
The equipment is a radiometric infrared camera, portable with FPA (Focal Plane Array). It
could be noted that the camera is capable of scanning large areas from ground works in real
time and take high resolution images of gas leaks.
The GF320 model has the advantage of having a spectral filter optimized for detecting gas
leaks and vapors. The thermal sensitivity of the camera is less than 35 mK with temporal
adaptive filter if enabled.
Fig. 8.3. Refinery and ESPOL Personnel during Field Testing
6
This training was made possible by HIVIMAR Cia Ltda, the local representative of FLIR products. The project
recognizes the help of Ing. Jaime Echeverria, alumnus of ESPOL and owner of the company, for allowing the
participation of the project personnel in the training as part of the training to refinery personnel included in the
sale of the camera to Petroecuador.

8.3 Training and Dissemination of the Project
On December 14th, 2012 a workshop about the project was held at ESPOL. The goal of the
workshop was to disseminate to professors, students and professionals, the project results.
The workshop addressed the following topics:
Natural gas engineering, by engineer Roberto Silva, oil specialist.

Measurements and equipment, by engineers Ronald Ruiz, Jos Carlozama, Gabriel
Agila and Vernica Aguirre.
Plugging inoperative oil wells, by Ing. Ignacio Wiesner.
Local socioeconomic status of the community in the area of influence, by sociologist
Roberto Saenz.
Systems that use fugitive natural gas, by Ing. Gonzalo Zabala.
The workshop was recorded for future dissemination activities.
An extended abstract was submitted for consideration of the organizers of the 11th Latin
American and Caribbean Consortium of Engineering Institutions LACCEI- Conference to
be held in Cancun in August 2013.

9 DEFINITE FIELD LOCATION SELECTION
9.1 Mapping System
Using the digital information obtained by the project USEPA-ESPOL, based on data
provided by the Ancon Project of February 2009, it was developed a geographical database in
.tab (MapInfo) and .shp (ArcView) formats; linking production information of August-09,
and incorporating monitoring data of this project from wells and tanks when it was available.
Additionally, it was developed a geographic base design in which the smallest unit of
information is the oil well. And it was generated as the minimum information unit for the
project the so called unit cell, corresponding to a geographic area of 1 x 1 km, that is used to
summarize or consolidate the information obtained through a geographic object polygon type.
The layers that form the geographical database USEPA-ESPOL are summarized in the
following chart.
The layer gridepa1000 (G-1) was generated by creating polygons of 1 km2, in order to
develop cross spaces to consolidate data, generating relevant information.
The database information of the field consolidated by production (well) for the period June-
96/Aug-09, was subsequently grouped through a geographic enquiry and permanently
attached to the object EPA_MASTER (O-1).

The total accumulated production (ACUMULADA) is defined as the oil or gas production of
the field, recorded from June-96 to August-09 at the database PRODUCC9699 (O-99), which
is from a selection of fields of the data table PRODUCT (*).
Using layer G-1 through a spatial query was updated the layer O-1, including the code of the
unit cell in which is located the well.
The layer structure O-1 and G-1 are summarized below. And in Annex 9 are described in
detail the components of the layers.
The information collected in the field (test group) is included throughout the system graphic
layers Pozos muestreados por EPA-ESPOL (M-1) and Tanques muestreados por EPA-
ESPOL. The relevant information from the aforementioned tables was entered to a data
handler software (ACCESS) and hence, using the import tool it was incorporated as an
alphanumeric object in Mapinfo, where using the geographic layers O-1 it was geocoded.
Using the geographic database as described above, 10 maps were developed, which are listed
in the following chart and included in Annex 9 of this report.

10 SOCIO-ECONOMIC ASPECTS OF NEIGHBOURING TOWNS
10.1 Political and Administrative Division of Santa Elena
The Ancon field is located in the peninsula of Santa Elena, in the province of the same name.
The following table shows the political and administrative division of the province.
Table 10.1. Political and Administrative Division of Santa Elena

Code -
Code City Code - Parish
Province
24 01 50 Santa Elena
24 01 51 Atahualpa
24 01 52 Colonche
24 01 Santa Elena 24 01 53 Chanduy
24 01 54 Manglaralto
24 - Santa
24 01 55 - Simn Bolvar (Julio Moreno)
Elena
24 01 56 - San Jos de Ancn
24 02 La Libertad 24 02 50 - La Libertad
24 03 50 Salinas
24 03 Salinas 24 03 51 Anconcito
24 03 52 - Jos Luis Tamayo (Muey)
Source: INEC (2009), Divisin Poltica Administrativa de la Repblica del Ecuador.
The geographic area that is proposed for this project includes settlement known as San
Raymundo, in city La Libertad.
10.2 Demographic and Social Aspects in San Raymundo

10.2.1 Population Growth in La Libertad
In the period 1990 to 2010, the population of the city of La Libertad increased by 1.8 times.
At the beginning of the period, the city had reached a population of 53,108 inhabitants and by
the end of 2010, based on the final results of Population Census, registered 95,942
inhabitants. While in the country, during the same period the population increased by 1.5
times, which shows more dynamic population growth in La Libertad. It is also noted in the
last inter-census period (2001-2010) that although the city increased its population in absolute
terms by 23.6 per cent, its relative importance only gain 0.02 percentage points compared to
the total population (see Table 10.2).
Table 10.2. Population of Ecuador, City of La Libertad and Percentage of the

Population of La Libertad Regarding the Country. Period 1990 - 2010
Ecuadorian La Libertad
Year Percentage (%)
Population Population
1990 9,697,979 53,108 0.55
2001 12,156,608 77,646 0.64
2010 14,483,499 95,942 0.66
Source: INEC, Resultados Definitivos de los Censos de Poblacin.
The population growth in the city of La Libertad is attributable, on the one hand, the natural
increase (difference between births and deaths) and, on the other hand, the growth occasioned

by the migration that the city has experienced; which undoubtedly has an impact on the
demand for goods and services, as well as on spaces and natural environments of the city.
This growth has determined that the population occupies the entire area of the county.
10.2.2 Cultural Historical Context

The urbanization process experienced by the city of La Libertad, supported by the periodic
migrations brought by another type of community, namely the community of interest. This
view leaves out the geographic location element and takes into account common goals
regarding life situations, which can range from socioeconomic activities until making alliance
to meet basic human needs such as finding a place to live. Examples are housing
cooperatives, community businesses, sports groups, political, religious, etc., that have a
particular way of introducing into the city (see Figure 10.1).
Fig. 10.1. San Raymundo Settlement

Source: ESPOL fieldwork in November 2012
To explain the rapid growth of the city of La Libertad, it must be understood the spatial links
established with other jurisdictions in the country, especially on the coastal region and the
city of Guayaquil, among other geographical areas; and, the structure of those links. In other
words, to discover in what way human, commercial, financial relationships have generated
and continue to generate the spatial reality of the city of La Libertad.
10.2.3 Geographical Location of San Raymundo

San Raymundo is located to the southwest of the city of La Libertad, entering the road
leading from Puerto Lucia to Puerto Aguaje (see Figure 10.2).

Fig. 10.2. Location of San Raymundo (La Libertad)
10.2.4 San Raymundo Population

In San Raymundo in 2010 (year of the last population and housing census) 1854 inhabitants
were listed, occupying a total of 445 homes, which led to an average of 4.2 occupants per
household (see Table 10.2). A total of 640 housing dwellings were identified with a total of
65 unoccupied and 52 in different stages of building.
Table 10.2. Population and Occupied Homes in San Raymundo. 2010

Census Total Occupied Average
Census Sector
Area Population homes occupants
21 2, 3, 5, 6 1,854 445 4.2
Source: INEC. Population Census VII and Housing Census VI, 2010.
San Raymundo is located in Zone 21 on Census Tracts 2, 3, 5 and 6 (see Figure 10.3).

Fig. 10.3. Census Cartography of San Raymundo
Source: INEC Mapping Population Census 2010
Other demographic aspects, for instance the distribution of population by age, level of
education, productive activities and basic services in homes, are described in detail in Annex
10 of this report.
10.3 Field Research to Economic Establishments

The overall objective of the project in relation to the development of communities in the area
of influence is to meet the needs of basic services in the towns especially those related to
energy demand. This is intended in order to prioritize investment in infrastructure that
maximizes the utility of natural resources that are exploited in Ancon, minimizing the
environmental impacts and improving the life quality of the community.
In November 2012, an inventory of the economic establishments was completed in order to

have updated information to enable planning and propose solutions for future energy demand.
The results are shown below.
10.3.1 Area of Research

The research population belongs to the area of influence of Ancon field in the Province of
Santa Elena, in the settlement known as San Raymundo in the city of La Libertad.

10.3.2 Objetives of the investigation
Field research is aimed to:
Identify the available electrical service;

Investigate the energy demand in the area;
Investigate the monthly consumption of electricity;
Measure level of satisfaction with current services;
Find out about the willingness of people to use alternative energy;
10.3.3 Investigation Units

The research units were economic establishments of the geographical area of San Raymundo.
10.3.4 Research Universe

The universe of the research comprises all economic establishments of San Raymundo.
10.3.5 Research Instrument

A questionnaire was designed based on 41 variables, including: an overview of the
establishment (name and location), appliances used (radio, blender, microwave, refrigerator,
air conditioning, computer, TV, etc.), industrial equipment (welding, grinding, industrial
furnace, etc.) and information relating to energy and the willingness to use alternative means
of energy.
10.3.6 Main Results

As a result of the implementation of the survey (format attached in Annex 10) we could see
several issues in the study area, which are described below.
10.3.6.1 Economic Establishments

Economic establishment is defined as the economic unit under a single ownership or control,
or under a single legal entity, that is dedicated exclusively or primarily to one kind of
economic activity at a single location.
In the area of San Raymundo there are 51 economic establishments for 2012 (see Annex 10),
additionally there were identified 18 establishments that once operated and currently do not
work. For 2010 the National Institute of Statistics and Census listed 58 sites, therefore on
average there are 32 people per economic establishment in the area of San Raymundo.
It should be noted that a minority of establishments do not work regularly and the amount of
activity varies throughout the year. Moreover, the number of establishments can be increased
between the months of December to April coinciding with holidays on the Coastal region.
Other establishments have poor conditions (see Figure 10.4).

Fig. 10.4. Shop S/N in San Raymundo
Source: ESPOL fieldwork in November 2012/
10.3.6.2 Types of Economic Establishments

Below, in Table 10.3 are listed the economic establishments and data related with their
electricity consumption.
Tabla 10.3. San Raymundo, Economic Establishments 2012

Consumption
No. Establishment Name ZS-Mz Cost USD
kWh
1 Yanin Multiservice 21-03-01 Unknown Unknown
2 Cyber Word 21-03-01 Unknown 100.00
3 Store (no name) 21-03-01 Unknown 12.00
4 Block Seller 21-03-01 46 12.87
5 Restaurant (no name) 21-03-02 114 28.09
6 Fridge Workshop 21-03-02 95 23.51
7 Mini Shop S/N 21-03-03 100 25.00
8 Foto David 21-03-03 65 8.00
9 Shop and Store (no name) 21-03-03 Unknown 60.00
10 Little Shop (no name) 21-03-03 0 0.00
11 Store (no name) 21-03-03 N/A
12 Cyber Zone 21-03-04 Unknown 80.00
13 Electrical Workshop Parrales 21-03-04 Was Closed
14 Store (no name) 21-03-04 N/A
15 Mini Bazar Jssica 21-03-04 Unknown 20.00
16 Little Shop (no name) 21-03-04 N/A
17 Phoneboxes 21-03-08 Unknown Unknown
18 Catholic Church 21-03-07 Was Closed
19 CNH Sirenitas del Mar 21-03-07 Was Closed
20 SCS San Raymundo 21-03-04 Was Closed
21 Mini Shop (no name) 21-03-07 Was Closed
22 Tienda Hermanos Burgos 21-03-07 564 69.80
23 Shop El Regaln 2 21-03-07 Was Closed
24 Cyber Hermanos Borbor 21-03-05 554 70.00

Consumption
No. Establishment Name ZS-Mz Cost USD
kWh
25 Nuevo Templo Church 21-05-03 Was Closed
26 Asamblea de Dios 21-05-04 100 16.00
27 Vero Store 21-05-05 215 35.00
28 Shop (no name) 21-05-05 140 22.00
29 Shop (no name) 21-05-06 75
30 Vanessa Store 21-05-06 300 48.00
31 Shop (window) 21-06-10 Unknown No sabe
32 Pentecostal Church 21-06-10 Was Closed
33 Shop (no name) 21-06-09 94 22.00
34 Shop (no name) 21-06-09 Unknown 30.00
35 Shop Bendicin de Dios 21-06-07 92 20.00
37 Block Seller 21-06-05 Was Closed
38 Block Seller 21-06-01 Was Closed
39 Ocean Fish 21-02-18 3.000 5.000
40 Pasiones Hostal 21-02-16 Unknown 170.00
41 Gnesis crafts 21-02-16 Was Closed
42 El Manantial Hotel 21-02-16 304 35.86
45 Shop (no name) 21-02-03 108 25.68
46 Shop (no name) 21-02-17 Unkown 23.00
47 Shop (no name) 21-02-17 Was Closed
48 Shop (no name) 21-02-06 Was Closed
49 Bohrquez Store 21-02-06 220 40.00
50 Bazar y Novedades (no name) 21-02-04 Unknown 42.00
Source: ESPOL field research in November 2012 (see Annex 10).
10.3.6.3 Perception of Electric Service

The majority of the respondents qualify the electrical service as regular (44.7%), as seen in
Table 10.4.
Table 10.4. Perception of Electricity Service

Area of
Alternative %
Influence
Good 12 31,6
Regular 17 44,7
Bad 8 21,1
Unknown 1 2,6
Total 38 100,0
Source: ESPOL fieldwork in November 2012
In addition, the majority of the respondents would be willing to receive technical explanation
on the use of alternative energy technologies.

10.3.7 Conclusions
The increasing population and its concentration in La Libertad are contributing to the
deterioration of habitat and quality of life, since neither infrastructure nor basic services have
been able to cope with the increasing demand.
The population of La Libertad is increasing not only in number, but also is demanding higher
quality of life levels, and is pushing for greater use of natural resources. This increases
pollution problems and requires urgent efforts to decrease the impact on nature and social
environment.
The proposed use of fugitive methane gas from wells of Ancon field is justified from the
social standpoint, proving suitable for the community in the project area.
The proposal is in line with the Strategy "Provision of basic services according to population
growth" from the National Development Plan, which includes in Objective 1 "sponsor equity,
social cohesion and territorial integration", and points out in Policy 1.6 "Ensuring universal
access to quality public services social, cultural and recreational programs."

11 GAS RECOVERY APPLICATIONS: CASE FOR GAS DISTRIBUTION IN
NEIGHBOURHOODS
The fugitive gas from suspended from producing and abandoned wells in the Ancon field
contain a high percentage of methane and other associated gases. Therefore this gas must
pass through a moisture, gas and liquid separation plant, before they can be used as thermal
energy source to meet the consumption requirement of 600 families of San Raymundo.
11.1 Collection and Treatment System of Natural Gas

11.1.1 Case A
Oil wells where the natural gas will be extracted (abandoned and suspended from production
wells), are located in a wide area (see Fig. 11.1) for which the collection should be performed
by two tankers equipped with an exhaust-compressor system, which transport the collected
gas to the treatment plant. Equipment specifications for natural gas compressors are presented
in Annex 11.1.
Fig. 11.1. Oil Field Gustavo Galindo Velasco (Ancon Field)
Since the pressures of the fugitive methane are very low, the capture and collection process
presented in this case must be carried out interconnecting between 8 to 10 wells with pipes of
various diameters starting with 2.5 or 3 inches in diameter on the wellheads and gradually
coupled with larger diameter pipes which end with diameters of 10 to 12 inches (main pipe).
The cost of the two compressors is estimated at around US $ 240,000. The cost of the two
tankers and their respective storage system is approximately US $ 160,000.

The fugitive gas contains about 86% methane concentration after being collected in the
tanker and it will be transported to the treatment plant for the dehumidification and separation
process. The approximate cost of the plant is US $ 350,000.
The approximate length of the pipe is 35 km. The cost of the gas pipeline and the compressor
interconnecting branches is around US $ 100,000 per kilometer, giving a total value of
US $ 1.9 million approximately.
After that methane gas has been purified, it will be passed to a storage tank (compressed gas
tank) for distribution to the commune San Raymundo.
11.1.2 Case B
As the case presented before, the capture and collection of the fugitive methane from the
wells, will be carried out through interconnected pipelines Since the pressures of fugitive
emissions are very low, the process of capturing and gathering, presented in this case, it must
be carried out by interconnecting between 8 or 10 wells with pipes of various diameters
starting with 2.5 or 3 inches in diameter from the wellheads and gradually coupled with larger
diameter pipes ending in compressors with diameters of 10 to 12 inches (main pipe). The pipe
would be coupled to a compressor to pump the gas to the treatment plant, in this case a
greater amount of pipe would be used, but the operating cost will decrease in relation to the
case of collection with portable equipment.
To proceed to the gas collection from the abandoned wells by this process, groups of 8 to 10
wells will have to be interconnected (approximately 100 wells). The number of groups
depends on the distance between each other.
The fugitive gas collected by the compressors would be transported to the treatment plant.
The cost of the two compressors is around $ 240,000, and the approximate cost of this
treatment plant is equal to the deemed cost in case A.
The approximate length of piping to connect the wells to the treatment plant is 70 km. The
cost of the gas pipeline and the interconnecting branches leading to the compressor is around
US $ 100,000/km, giving a value of approximately US $ 3.9 million.
As in case A, after methane gas has been purified in the treatment plant, the gas will be
passed to a storage tank (tank of compressed gas) for distribution to the San Raymundo
commune.
Note: Because some wells that have been monitored are widely separated from groups 1 to
10, the pipe connection costs would be very high to collect the low flows of gas that emit
these wells, so these links would be impractical.
To cover the gas flow that the commune would require, the gas emitted from wells that are
not connected to the current treatment station could be used, these are: SPA0052, SPA0207,
SPA0250, SPA0256, VAL0006, whose total flow is 8333 ft3/day. This added to the flow of
gas emitted from abandoned wells SPA0077, SPA0082, SPA0088, SPA0203, SPA0221,
SPA0225, SPA0246 that totals 1714 ft3/day, located in the north, a gas flow of about 10,000
ft3/day would be collected, and a total of 27,000 ft3/day would be reached.

Table 1 shows the daily methane production of the 11 groups of wells which should be
interconnected with pipes, either to the gas compression process with portable equipment or a
permanent connection to the treatment plant.
Table 11.1. Identification of Daily Methane Production of Wells and Interconnecting

Piping Length
# Flow Piping Length
Group Wells
Wells (ft3/day) (m)
SPA0077, SPA0082, SPA0088, SPA0203, SPA0221,
1 7 1714 1297
PA0225, SPA0246
ANC0318,ANC0382, ANC0590, ANC0381, ANC0394,
2 6 806 1226
ANC0388
3 8 3110 2587
ANC0424, ANC1703, ANC1713
CMA0021, CMA0006, CMA0020, CMA0026, CMA0024,
4 6 1843 1472
CMA0038
5 ANC0341, ANC0308, ANC0309, ANC0309,ANC0307, 11 1814 14396
ANC0340, ANC0294
6 7 1007 3734
ANC0273, ANC0270
7 9 3918 1973
ANC1076, ANC0988, ANC1132, ANC0986
8 6 402 892
ANC1657
9 ANC0441, ANC0439, ANC0440 3 1152 344
10 7 3249 2787
ANC0015, ANC0017
11 SPA0052, SPA0207, SPA0250, SPA0256, VAL0006 5 8333 1980
TOTAL 76 27348 32688
Table 1 has been created by taking information from the results of fieldwork regarding the
abandoned wells (geographical location, production, etc.). The linear distance between wells
were calculated by the GPS coordinates taken, i.e., latitude and longitude.
In Table 1 there are only 76 wells since this production is enough to meet the estimated gas
consumption in the district concerned.
The distribution of the groups of wells is presented in Annex 11.

Fig. 11.2. Case B: Main Pipe and Wells
11.1.3 Case C
If the cost of implementing systems of capture, transportation, processing and distribution of
natural gas for domestic use is not viable (economic, environmentally, socially, or even
politically), the wells should be plugged to minimize fugitive gas emissions to the
atmosphere. The cost of each plug is about $ 1,000,00 and could be used for between 1000 or
1200 wells. The plug model with its components, geometrical characteristics, material type,
and tools is presented in Annex 12.7. Figure 11.2 shows the location of San Raymundo and
Santa Paula.
Figure 11.2. San Raymundo and Santa Paula (North region)

11.2 Design of Natural Gas Supply System for Domestic Use
11.2.1 Consumption Requirements
For options A and B, an estimation of the fuel demand was performed, and the results are
presented below.
The natural gas supply system proposed comprises a fuel storage tank and pipe networks. The
supply system also includes control devices, control valves and flow control gauges for
recording mass consumption in each house. The proposal includes the storage of the natural
gas at a station near San Raymundo.
The use of natural gas (NG) by 600 families of San Raymundo would displace the
consumption of 900 tanks of 15 kg of liquefied petroleum gas (LPG) per month, assuming
that a family of 4-5 members uses 1.5 tanks of LPG per month. To estimate the quantity of
natural gas that is needed a series of calculations were carried out, considering that the energy
must be replaced by the same amount, must have equivalence between the LPG and NG. The
following table summarizes the consumption requirements of natural gas for domestic use in
San Raymundo. Annex 11 contains a detailed description of the calculations and
assumptions.
Table 11.2. Consumption Requirements of LPG and NG at San Raymundo

(tank/month)1 1.5
(kg/month) 22.5
Consumption of LPG per household
(m3/month)2 9.27
(ft3/month) 327.28
3
Energy consumed per household (kW-h/month) 278.33
(m3/month) 26.89
Equivalent consumption of NG per household4
(ft3/day) 31.75
(m3/month) 19440
Consumption of NG in San Raymundo (ft3/month) 686335
5
(600 families) (m3/day) 648
(ft3/day) 22877
Notes:
1 The content of each tank of LPG is 15 kg.
2 Considering the density of LPG equal to 0.505 kg/lt, the expansion ratio is 1 litre liquid equal to 260 litre
vapour of LPG, and a vaporization of 80% of the tank capacity.
3 Considering each tank of LPG as a mixture 70/30 propane-butane. The heating values of propane and butane
are 27.51 kWh/m3 and 35.66 kWh/m3, respectively.
4 The heating value of NG is 10.35 kWh/m3.
5 The total consumption of NG by the 600 families of San Raymundo includes a 20% additional, as a safety
factor.
The consumption of natural gas (NG) estimated for the 600 families of San Raymundo does
not consider other types of businesses, such as bakeries, pastry shops, operating in the study
area.
11.2.2 System for the Utilization of Fugitive Natural Gas: Storage and Distribution
(Case B)
To estimate the capacity of the storage system for the NG, two conditions were evaluated: the
storage of liquefied natural gas (LNG) and the storage of compressed natural gas (CNG), as

seen in Table 11.2. Domestic and industrial gas meters have been considered, both of them
are diaphragm gas meters (the most often commercially used), and their capacities are listed
in the following table.
Table 11.3. Supply System of Natural Gas for San Raymundo

Component Type/Capacity Observations
18 m3 LNG or 54 m3 Supply for 600 families with

Storage tank CNG (for constructive autonomy of 20 days for LNG
aspects) and 25 days for CNG
Gas pipelines (artery network or It requires 3600 m of pipe for
3.5 in
(PEMD main pipe) the perimeter network.
It requires 12000 m of pipe of
Gas pipelines (PEMD secondary 2.0 inch for transversal network
2,0 in
network), or network rings and 6000 m for longitudinal
network.
Artery network pressure 1,4 a 4 bar
Residential consumption gas
G1.6
meters
Commercial consumption gas
G100
meters
Internal network pipe (copper,
flexible stainless steel or Pe-Al- in
Pe)
Inlet pressure to domestic use
25 mbar-28 mbar
point
20 m including
Distance from the LNG or CNG
perimeter fence or
tank to the artery network
wall
Note: This data has been
gathered for network design
Distance between tank and
See Annex 11 using census mapping
farthest housing
information where San
Raymundo is located.
A storage tank of compressed natural gas very similar to the capacity required for this project
is presented below.

Fig. 11.3. Vertical Tank for the Storage of Natural Gas
11.2.2.1 Considerations
The natural gas distribution network for domestic use should be done through underground
pipelines from the regasification or pressurized tank station to the consumer (home or
restaurant). The maximum operating pressures permitted are 150 kPa and 5.0 kPa for primary
and secondary networks, respectively.
The supply pressure of the natural gas (NG) at the outlet of the storage tank should be on the
order of 5 bar. The inlet pressure of NG at the point of use must be 1.96 kPa. When the
system is in operation, continuous monitoring of pressure transients at points of use is
suggested; these variations are above 15% and below 25% of the nominal pressure.
At the point of use the gas network should have a consumption meter, a pressure control
valve, and at least three stopcocks; and, for added security the main pipeline will be installed
at a depth of 0.5 m approximately, covered with a thick concrete structure. In addition, at the
points of use must have a shutoff valve between the main pipe and the control box; this valve
can be opened only with a special stopcock to prevent tampering in case of fuel flow shutoff
for non-payment to the supplier company.
11.2.3 Advantages of the Proposed System

Continuous availability of fuel (NG) from the gas network direct to the consumer.
Not having to pay high values when there is a shortage of liquefied petroleum gas
(LPG).
Provide fuel (NG) for San Raymundo, a vulnerable population, compensating some of
the wealth provided by this area where oil is extracted.
The gas supply system to households is a proven technology that presents no
problems if the network is installed following recommended technical procedures.
The benefits received by the community, would help to raise their quality of life.
As an example, the following figure shows the consumption meters for natural gas in the
commune of Bajo Alto of Tendales parish, at the city of El Guabo.

Fig. 11.4. Natural gas Consumption meter, at Bajo Alto (El Guabo Machala)
Source: Ministry of Non Renewable Natural Resources.
11.3 Pipeline System

11.3.1 Guidelines
The gas cannot be used inside homes at the same pressure that is distributed within the
network because the operating pressure of the gas appliances is between 15.5 and 23 mbar.
The pressure, then, should be reduced to these levels, which is achieved using regulators to
reach the desired pressure in one, two or three stages.
The two-stage adjustment reduces the initial pressure of 4 bar up to 1380 mbar or 345 mbar,
depending on the case, and then up to 23 mbar. The first regulatory site is placed outside of
the housing and the second is placed at the entrance of the monitoring center. With multiple
monitoring centers, are required as many second stage regulators.
The three-stage adjustment reduces the first from 4 bar up to 345 mbar and 1380 mbar, in the
second to 138 mbar and in the third to 23 mbar. Regulators 1 and 2 are on the outside of the
house and at the entrance of the monitoring center, and regulator 3 can be located within each
dwelling.
11.3.2 Materials Used in Arteries Lines and in the Rings

For the design and installation of natural gas networks, external networks PEMD pipe should
be used, of 20 mm in diameter for electrical connection, 25 mm for rings and connections,
50 mm for rings and 90 mm for arterial lines.
To isolate the rings connected to the arterial line, valves made of polyethylene are used,
which bind to the process pipe by thermal fusion or electro-fusion. Each segment of the
system of arterial lines, in turn, must have valves that are located generally below the node
where the sections are interconnected to stop the gas flow when needed.

11.3.3 Dimensioning of pipes
The dimensioning of the gas pipe and the specification of the pressure regulators must
maintain pressure at the points of use as close to the nominal pressure recommended in
related Standards. Or in the absence of this, the nominal pressure reported by the
manufacturer must be used.
The sizing of the installation was calculated considering that the natural gas will be used as a
domestic fuel.
The natural gas distribution network was calculated considering that at each supply point the
inlet pressure of the NG should be 2.6 kPa. It has been foreseen momentary pressure
fluctuations at the points of use. These variations are usually above 15% and below 25% of
the nominal pressure. Gas appliances that are specified by the manufacturer to operate at
different gas nominal pressures cannot be supplied by the same regulator of last stage.
The pipe has been sized in order to ensure the required flow to supply the facility, taking into
account the maximum allowable pressure drop.
11.3.4 Calculation of Pipes Diameter and Gas Velocity

The calculations were executed with the following considerations:
The maximum hourly flow rate (0.39 m3 / h).

The inlet pressure of the distribution line to the gas meter is 0.4 to 4 bar.
The maximum speed of natural gas at any point shall not exceed 20 m/s, with the
flows, pressures and diameters considered.
The formulas used to calculate the diameter and the pressure drop are the quadratic Renouard
equations, since in this section the NG supply pressure is above 100 mbar. In Annex 11 is
described in detail the calculations.
11.3.5 Additional Considerations

The natural gas flow rate (Q) for each household was determined dividing the adopted power
(gas appliances) by the lower heating value of the gas (LHV).
The maximum pressure drop is 15 kPa in primary networks. The minimum pressure at the
point of use is from 2.6 kPa.
The minimum nominal diameter admitted to the internal distribution network is 15 mm.
The natural gas distribution system is composed of a steel matrix line fed to a maximum
gauge pressure of 20 bar. This interconnects the network equipped with a pressure regulating
station, in which the gas is reduced and controlled to a maximum gauge pressure of 4 bar.
From the arterial lines are derived the rings and polyethylene pipes, from which connections
are taken to supply the households. No point of a ring must have a pressure less than 1.4 bar.

The description of the components (meters, controllers, among others) is described in Annex
11 of this report.
11.3.6 Connection Costs

The connection cost of each dwelling to the natural gas network is approximately USD 150,
which includes the pipeline, meter, shutoff valve, regulator and a metal box.
Table 11.4 presents the costs of equipment, instruments, fittings and connections of the fuel
supply system.
Table 11.4. Reference Costs of Equipment and System Accesories

Unit Total
ID. Description Unit
Value ($) Value ($)
1 Station of natural gas
1 Cryogenic container, cap. 18 m3
1 Instrumentation kit (vacuum gauge, thermometers,
security valves, etc.)
2 Pressure regulating valves of single stage 130,000 130,000
2 Valves
1 Gasifier capacity 0.05 m3/h (liquid phase)
2 Flow meters
2 PEMD pipes 3.5 in. 3,600 m 5,20 18,720
3 PEMD pipes 2.0 in. 18,000 m 4,50 81,000
4 Couplings 100 6 600
5 Pressure regulaing valves of thwo stages (*) 15 100 1,500
6 Valves 15 75 1,125
7 Intra-domiciliary facilities 600 150 90,000
Subtotal 322,945
(*) Pressure regulating valves that reduce and control the gas at a gauge pressure of maximum 4 bar and
minimum of 2 bar at any point.

12 ECONOMIC COMPARISON OF THE DIFFERENT ALTERNATIVES
12.1 Introductory Notes
Through this study it can be concluded that the methane gas recovered yields expectations as
it can be used in homes for cooking which will be explained in the following lines.
Indeed, with respect to the estimations ESPOL has made on the quantity and quality of
methane gas leaks in some wells in the field, it was found that of the 2800 wells that
approximately exist in the Ancon field, about 1300 correspond to abandoned or suspended
units, which are open to the atmosphere. Needless to discuss the need and desirability of
closing these wells to prevent the leakage of gas that, although in small quantities
individually, represent a large volume of gas as a whole, produced and expelled to the
atmosphere despite the wells being unproductive or abandoned.
The problem is that the gas expelled into the atmosphere is a source of pollution and puts in
danger the health of the population of the area, which is a depressed socioeconomic
community. Also there are global environmental benefits from preventing the emission of
greenhouse gases.
Additionally, and in accordance with the policy of the Ecuadorian government to achieve
good living status for the different population groups, the gas from these wells, rather than
escaping to the atmosphere, could be collected and retrieved with a certain investment in
collection sites where they can serve nearby towns using it as domestic gas for the
communities. To this end, the project focused the analysis on the community San Raymundo,
behind Santa Paula oil and gas collection and distribution station, road to La Libertad, as a
pilot for the purpose. This proposal is made based on the social and economic conditions of
the San Raymundo community and due to its proximity to the field.
Based on the above background and the results found in this study, ESPOL through its
Faculty of Mechanical and Production Sciences Engineering could promote a project to
recover the gas from the wells and collect it for distribution to households in the pilot
commune of San Raymundo to be used as domestic gas. If this proves non-viable the wells
could be sealed to prevent contamination, this being an alternative course of action, also
explored here.
As presented in previous sections, three cases are to be analyzed:
1. Establish a distribution of piped gas to community households, thus utilizing the

recovered methane collected by trucks from approximately 100 wells.
2. Establish a distribution of piped gas to community households. Recovered gas from
100 wells approximately is collected in a treatment plant. No trucks needed.
3. The construction of about 1200 plugs assemblies in different diameters: 6, 4 7/8, 8,
etc., and the plugging of the wells.
For any course of action taken it is mandatory to estimate the necessary investments for any
of the options and to estimate their feasibility.

12.2 Investment Necessary for Each Project
If the decision is made for gas distribution to households - Option 1- (Case A), this project
has been thought for 600 families, with 4-5 persons per family. For this project to be
operational, it is necessary first to extend a pipeline network among the different wells which
would discharge to special trucks in a number of 2 and from here to a treatment plant for
methane. After this, 2 compressors and 1 gas storage tank would be needed before final
distribution to households. Each truck would have a collector tank and compressor. This
alternative does not require the laying of a very long pipeline network and would have an
approximate investment of US$ 5327,945 (see annex 12.1 for details).
An alternative way -Option 2- (Case B) dispenses with the use of trucks but requires the
interconnection among all wells, requiring a longer pipeline network which discharges to a
main line that goes to a set of fugitive gas compressors and from here to the aforementioned
treatment plant. This alternative would have an approximate investment of US$ 8427,945
(see annex 12.2 for details).
If the decision is made to plug the wells -Option 3- (Case C), the construction of 1200
assemblies would cost approximately $ 1200,000.
This cost includes installation. It is necessary to have an exact location of the wells.
It should be noted that the wells in the oilfield have a variety of casing diameters. It is thus
necessary to gather information about the number of unproductive wells for each diameter, as
a result, costs could have variation.
A summary of the investments needed for each alternative is shown in the following chart,
expressed in US dollars. A description of the plug assembly that would be used is presented
in the Annex 12.7.
Option Cost
1. Piped gas distribution to homes. Production collected by trucks. 5087,945
2. Piped gas distribution to homes. Production collected by main
8427,945
pipeline.
3. Construction of mechanical plugs and sealing of 1200 unproductive
1200,000
wells.
For options 1 and 2 the distribution could be in charge of PETROECUADOR or a

distribution company to be created. Values are approximate and do not include investment in
land and building facilities to lower costs assuming they are provided by any of government
facilities to use under a long term land use contract.
Investments in fixed assets and the value of necessary permits from de Ministry of Energy or
from PETROECUADOR are approximate, expected to be in any case lower than envisaged.
The working capital is given by the cost of personnel including a manager, secretary, driver-
messenger, and a field engineer. The amount given should also cover the starting needs of
supplies, parts, insurance and others that would be financed by the company proceeds.

Funding of the proposed investment for any option selected is to be provided by the Ministry
or by PETROECUADOR.
12.3 Projects Turnover and Government Subsidy Savings
The gas consumption per family is about 22.5 kg per month if they used normal 15 kg LPG
gas tanks (1.5 tank/month). This will render a total consumption per year of 162,000 kg
(10,800 tanks) for the 600 families considered.
There is a recent presidential decree (March 2013 Decree No. 1458) establishing prices of
piped gas for domestic use in US$0.50 per million BTUs consumed.
Considering the calorific power and density of natural gas to be 10000 kcal/m3 and 0.6 k/m3,
it can be determined that a million BTUs consumption corresponds approximately to one 15
kg tank (1BTU=0.252 kcal).
This means that in a year the project income for piped gas distribution would reach at the
most $10,800 x 0.5 = US$ 5,400.
This shows that the government interest for the projects envisioned is social only, as
expressed in paragraph 12.1
It should be noted that LPG for domestic consumption is heavily subsidized. In 2011, the
government imported 835,603 metric tons of LPG at a cost of USD $ 770,747,326.40. This
means that it bought a kilo of gas at $ 0.92, the same that, if multiplied by 15 kilos, which is
the content of a cylinder of cooking gas, the cost to the country was USD 13.8, to which must
be added the cost of bulk storage rates, filling in cylinders, transportation, maintenance and
replacement of cylinders and marketed charged by traders (Duragas, REPSOL-YPF, AGIP,
Congas, etc.) to the State for the provision of these services (Ref. http://www.
informatecuador.com/inicio/index.php?option=com_content&view=article&id=1464:ecuador
-sigue-el-problema-del-gas-domestico&catid=6:opinion&Itemid=18). The estimated real total
cost per 15 kilo tank could easily reach US$14.
If the consumption of the families in our study is the equivalent of 10,800 tanks, the
government savings for not using subsidized gas for them would be 14 2 = $12 per tank
which amounts to US$129,600 per year.
12.4 Emission Reductions

Emission Reductions Certificates are a type of emissions unit representing one ton of carbon
dioxide-equivalent (CO2-e) sequestered or abated.
These Emission Reduction Certificates can be purchased from the primary market (purchased
from original party that makes the reduction) or secondary market (resold from a
marketplace). In the present case the analysis is made using the secondary market in the
USA,
At present time prices for are under $5, say $4 per ton CO2eq per year at the Chicago Climate
Exchange. Considering that the present project aims to reduce emission of methane and other

hydrocarbons to the atmosphere which has an impact factor 20 times that of CO2 the price of
the emission reduction considered are $80 per ton of abated gas.
Now, based on the analysis of fugitive gas from 100 wells it was determined that these wells
expel to the atmosphere approximately 27,000 ft3/day. The sequestered or abated gas in
options 1 and 2 would then amount to 110,799 m3/year (1 ft3=0.028317 m3). For this total it
has been considered a 40% certainty index.
The amount of gas recovered in metric tons, for a normal density of natural gas 0.6 kg/m3
turns to be 66,479 kg or 66.4 MT per year. It is possible then to validate and register to the
proper instances this abated emission from the 100 wells considered in Ancon oilfields in
order to get the issuance of the respective Emissions reduction certificates ($80/MT) which
will generate revenue for $5,312 per year.
In the same line of reasoning, for 1200 gas emitting unproductive wells (option 3), and
assuming their behaviour similar to the 100 wells analysed, the total quantity of abated gas
would reach 321,600 ft3/day or 797 MT/year. In emission reductions value, this is equivalent
to $63,760 per year
12.5 Turnover of the Three Options Analysed

From the government point of view the yearly turnover obtained would be:
For options 1 or 2: $ 140,312/year

Sales income 5,400
Subsidy savings 129,600
CERs revenue (100 wells) 5,312
For option 3: ERCs revenue (1200 wells) $ 63,760/year
12.6 Cash Flows and Financial Evaluation of Each Scenario

Given the nature of the project and its long maturity time, a 30 year period has been
considered to cover the investment for each scenario (option). The respective cash flows are
presented in annexes 12.4 to 12.6 below as an estimate of the available cash in each scenario
for the years of the project.
Actually the structures of the cash flows are very simple: an initial investment given above
for each option considered and equal annual revenues given also above for each option. It is
assumed extra investments of $ 500,000 (options 1 and 2) and $ 100,000 (option 3) will be
necessary by the middle of the useful life of the project. The salvage investment value at the
end of the project has been taken as $ 300,000; $ 450,000 and $ 100,000 for options 1, 2 and
3 respectively.
Operational flows are thus obtained, comprising the core project operation.

The net flows generated are finally used to evaluate the project financially. Since this could
only be a government project, the cut rate for NPV calculations is taken as 3% as well as the
net flow deflator index to correct flows for inflation which has also been taken as 3%.
In all three options considered, the relevant indicators are shown for comparison.
Option 1 Option 2 Option 3
Initial Investment required (US$) 5,087,945 8,427,945 1,200,000

Revenue expected per year (US$) 140,312 140,312 63,760
Financial IRR calculated at current
-1.37% -3.67% 3.17%
prices
NPV at current prices -$ 2,461,265 -$ 5,643,985 $ 25,958
Benefit-cost ratio 0.53 0.34 1.02
Investment recovery period (years) No No 20.4
As can be seen option 3 is the most desirable. Even though the financial internal rate of return
reaches only a 3.2%, the investment can be recovered in 20.4 years with a low NPV which is
however much better than the negative values rendered by options 1 and 2. It requires a much
lower initial investment and does not need the creation of an administration unit.
The benefit-cost ratio or net worth index is the relation between revenues Y generated by the
project, and expenses G necessary for its operation taken both at their present value using a
deflator index r, expressed by:
n
Yt
(1 + r )
t =0
t
BC =
n
Gt
(1 + r )
t =0
t
As a relation between income and expenditure, the ratio will be greater than 1 when benefits
are greater than the expenses (revenues> expenses) and therefore the project is acceptable.
Otherwise, the project is inconvenient or represents losses.
The benefit-cost ratio shown for option 3 says that the project gets $ 1.02 for each dollar
invested in the conditions given for the project. In options 1 and 2 the returns are not
satisfactory.
Despite this, options 1 or 2 should not be abandoned and could be undertaken as pilot
projects with social interest for community benefit.

13 CONCLUSIONS
13.1 Conclusions
[1] Field work took a lot more time than originally planned. There were unforeseen
aspects that keep appearing, creating burdensome hurdles. Examples in the present
project include delays in acquiring equipment due to local regulations; the changing
nature of regulations in oil exploitation; difficulties in conducting reliable and
replicable field work; slow response from certain governmental agencies (this is a
delicate point to make), among others.
[2] Measurements were taken at well heads, and even though they may not have fulfilled
all the requirements of a more rigorous approach, they do point out the presence of
fugitive methane gas from the abandoned and/ or open well heads and some other
related infrastructure. The measurements do give a quantitative idea of the volumes of
fugitive gas involved.
[3] From the measurements of about 100 well heads which were considered, a daily flow
of fugitive methane amounting to about 27000 (twenty seven thousand) cubic feet per
day. This will suffice to supply fuel for domestic cooking needs for about 600
families from neighbouring towns. Cost analysis does not necessarily support this
alternative in a straightforward consideration.
[4] A project like the present helps increase consciousness of the presence of fugitive
methane. The amount of technical personnel from the various institutions
participating during the technical visits and during measurement operations showed
that they wanted to get involved in the various aspects of fugitive methane evaluation
and measurement.
[5] A method for the selection of representative well heads was implemented in this
project. At this point, the synergy with another on-going project of Oil and Gas
(Ancon- ESPOL project) which was under partial control of the technical counterpart
of this project, ESPOL, during part of the duration, was instrumental. It would have
been no easy task if such an existing project had not been in existence especially at
the start of the present project. Conditions changes during the execution of the project,
and this complicated the field work and brought about unexpected delays.
[6] The productive use of the fugitive gas and means to implement its utilization is not
easy task. Some possibilities have been presented in the report, and they are
interesting, in particular because it could help reduce the leakage of methane into the
atmosphere on the one side, while on the other is put to use for some energy needs of
neighbouring communities. Costs, on the other hand, tend to be somewhat
disproportionately high, and this possess a challenge to the application. Nevertheless,
the alternative of just capping the open well heads of abandoned wells appears to be a
viable one.
[7] A project like this requires the more or less continuous participation, at various levels,
of a myriad of technical personnel. The various components in technical,
environmental, chemical, measurements, equipment, gas and oil engineering, design,
sociological, and other aspects, makes it mandatory that this wealth of human
resources be kept in periodic call to assist with the ever changing project demands and

needs. And the negotiating and conflict- resolution capacity of some of the members
of collaborating groups from ESPOL proved to be also instrumental to secure
permission for field work in somehow sensitive geographic areas of oil and gas
exploration.
[8] A sustained effort had to be carried out prior to the field visit and field work. The
particular and changing situation of the Ancon Field, which was changing controlling
hands during the execution of the present project. These situations introduced undue
delays within the project and generated somewhat disheartening moments.
Nevertheless, recognizing that there was a fluid change in regulations and situations
in the oil scenario in Ecuador, the project personnel had to divert their efforts towards
some of the other activities and to look for alternative locations to keep carrying the
project forward. An example of this was the field visit to a local sanitary landfill,
where fugitive methane measurements were taken.
13.2 Recommendations
[1] Based on the analysis above, the recommended option to be executed as a first
priority is the plugging of approximately 1200 opened-to-air abandoned or suspended
oil wells in the Ancon oilfield (option 3). The reasons for this are, among others, the
following:
It is technically feasible.
The costs are reasonable.
The returns on investment and capital, IRR and NPV are acceptable.
A source of pollution will be eliminated.
Represents a source of skilled labour since plugs are national made.
Prevents the accumulation of greenhouse-effect gases in the atmosphere.
Does not require an administration unit.
[2] It is also recommended, as a second priority, the financing of a pilot project for the
distribution of piped gas in one of the communities in the area (option 1). Given the
need to improve the living conditions of the inhabitants of the area and a growing
population's claim for access to a better standard of living and the utilization, in their
province, of the natural resources it generates, the government could seek the
financing of such a project also.
[3] Although this solution is not financially appropriate, it should also be done
considering its high social interest to the community.

14 BIBLIOGRAPHY

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Final Report

Activities that advance methane recovery and use as a

EPA Agreement #XA-83397101

Jorge Duque-Rivera, MSc Mech. Eng., Project PI

With the collaboration of:

Andrea Boero V., MSc Energy Conversion and Management

Guayaquil, March 31st, 2013

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Annex of Chapter 7: Fugitive Methane Monitoring Results

Annex of Chapter 9: Mapping System

Annex of Chapter 10: Socio-Economic Aspects of Neighbouring Towns

Annex of Chapter 11: Gas Recovery Applications

Annex of Chapter 12: Economic Analysis of Alternatives

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1.2 Project Objectives

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1.3 Project Outcomes

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Figure 2.1. Location of Ancon Oilfield

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I. Political Constitution of the Republic

3.1 Political Constitution of the Republic

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3.2 Hydrocarbon regulations

Meanwhile, Article 13 (amended by Article 18 of the unnumbered Decree Law, RO 244-S,

The provisions of Article 34 (amended by Article 19 of unnumbered Decree Law, RO 244-S,

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3.3 Environmental Law

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The Environmental Regulations for Hydrocarbon Operations in Ecuador, in Article 1 states

The Environmental Regulations for Hydrocarbon Operations in Ecuador establishes

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3.3.1.1 Institutions with Territorial Competences

Autonomous regional governments

3.3.1.2 Institutions with Functional Administrative Influence and Competences

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Fig. 4.1. Oil Map of Ecuador

As mentioned earlier, the industry sees an evolution in terms of the application of

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5.2 Wells Characteristics and Production

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A description of the selected equipment and their operation is presented as follows.

6.1.1 Hi Flow Sampler 4

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6.1.2 Remote Methane Leak Detector Intrinsically Safe Model 5

6.2 Testing Procedure

Excluding the following units:

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Proximity of wells to inhabited areas.

6.2.2 Testing Activities

Fig. 6.1. Monitoring of Wells and Storage tanks

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Table 7.1. Monitoring Results of Natural Gas Emissions

SPA0088 360 508516 9750457

ANC0388 144 520544 9742459

ANC0547 259 520728 9743545

CMA0020 230 516291 9749554